11 tax-free income in India – every investor should know

POSTED BY manish ON April 23, 2015 COMMENTS (263)

Paying Income tax is one thing, which most of the people do not like. Everyone tries to minimize their income tax y some or the other means. So today, I will be sharing with you list of some income’s which are 100% tax-free in your hand.

Yes – you heard it right. if you earn these income’s, then you do not pay any income tax on them at all. This article is mainly for information purpose, because I have seen many investors who are yet not clear on the taxation rules of few income’s. Here we go

Tax Free Income

1. Interest on saving bank interest – upto Rs 10,000 a year

From 2013 onwards, a new section 80 TTA is introduced under which, the interest on your saving bank account upto Rs 10,000 is not taxable. So if your saving bank interest for a year is Rs 20,000 . Then out of that Rs 10,000 is exempted and only the rest Rs 10,000 will be added to your taxable income.

This is a great relief for tax payers, because it was really a big headache to find out the saving bank interest from all the accounts and add them up and pay income tax, because for most of the people, it would be few hundreds or thousands of interest income. Now that is gone !

2. Interest earned in NRE account

Any interest you earn on your NRE account is 100% Tax-free in India. Here we are talking about both, the Fixed Deposit and normal saving bank interest. Both of them are tax free for NRI. NRE deposits are a great way to earn a decent interest on the savings done by NRI.

Some of our clients even go an extent of taking loan from the country they are working in like UAE/Singapore because they get it at 2-3% and then reinvest the same in NRE deposits here in India where they earn around 8-9%. Also because there is no tax, hence TDS is also not applicable to the NRE account deposits.

And the best part is that the money in NRE accounts is repatriable, means if you are in US and you invest some money in India in your NRE account, the principle and interest money can be taken back to US 🙂 .

3. Share of Profits paid to partners in firm

If a partnership firm earns some profit and instead of retaining it within the partnership firm, its paid to the partners as a share of profits, then its tax free in the hands of the partner, because the tax is already paid by the firm on it.

So is A and B are partners in a firm, and they get 5 lacs each in a year as the share in the profits earned by the firm, then it will be tax-free in their hands. Note that if they are receiving any salary from the firm, then its taxed in their hands only.

I would like to request that as this is related to corporate tax, please consult a qualified CA on this issue.

4. Maturity or Claim amount received by Life Insurance Company

The money you get from life insurance companies on maturity, claim or surrender is 100% tax-free provided,the premium paid did not exceed 20% of the sum assured. I am quoting new amendments which have come in recent years

As per amendments introduced in the Finance Act, 2003, (i.e., with effect from April 1, 2003), any proceeds received on account of maturity/surrender of an insurance policy were exempt from tax only if the premium paid did not exceed 20% of the sum assured.

As an example, if the annual premium is R10,000, to qualify for exemption, the minimum sum assured under the policy was required to be R50,000.

If the sum assured was less than the said value, the entire maturity proceeds would be taxable. Such limit of 20% was later reduced to 10% by the Finance Act, 2012, (i.e., with effect from April 1, 2012) to increase the insurance coverage amount, i.e., the sum assured threshold was increased from a minimum of five times of annual premium to 10 times.

For policies taken on the life of a disabled person or person suffering from certain ailments, the limit was relaxed to 15% of the sum assured with effect from April 1, 2013.

5. LTA money received from Employer

Most of the companies pay LTA each year to their employees, which can be utilized for traveling purpose. This LTA is not taxable in hands of the investor provided they provide the proof of travel. So if your company is not paying you any LTA, ask them to restructure your salary and label some part as LTA, because almost everyone spends a minimum amount traveling in a year.

For example, if you are getting a salary of Rs 5 lacs and their is no LTA in your salary component, you can ask your employer to label 20k as LTA and rest 4.8 lacs as other components, this way you will be able to save tax on that 20k part at least.

6. Money got under VRS scheme upto Rs 5 lacs

If a person takes VRS (Voluntary retirement scheme) than any amount received up to Rs 5 lacs is income tax-free. However, not everyone is eligible for it. Only employees of Public sector companies or an authority established under a Central or State govt is eligible for this.

7. Money received from your EPF account after 5 yrs

The money one gets from their EPF account is also tax-free, provided the money is taken out after 5 yrs of service. A lot of times investors change their jobs in 3-4 yrs and withdraw their EPF money only to realise that they could have timed their withdraw in better manner and save 30% of their EPF money which went into income tax (assuming they are in 30% tax bracket).

8. Profits from shares or equity mutual funds after a year

When you earn any profits from your shares or equity mutual funds after holding it for minimum 1 yrs, its called Long term Capital gains, and its 100% tax exempt as per current tax rules.

For example, if you invest Rs 1 lac in shares and after 2 yrs its worth is now Rs 2 lacs. In this case when you sell your shares, you will not be paying any income tax on this Rs 1 lac profit because of long term capital gains rules.

However, it’s important to know that exemption is allowed only when Security Transaction Tax (STT) has been paid (which is paid by you when you buy on recognised stock exchange such as BSE or NSE). But if you do a out of exchange sales, then STT might not get paid and hence in future when you sell shares, you will have to pay tax on profits.

Update : Now after budget 2018, the profits from shares or equity will be taxed at a flat rate of 10% above the threshhold limit of Rs 1,00,000 in a financial year. Before budget 2018, the profits from equity after an year was 100% tax free.

9. Dividends received from your shares or equity mutual funds

You receive dividends from your stocks or equity mutual funds (dividend option). That dividend money you get is also tax-free in your hand. However, the bad side of the story is that company anyways pays the dividend distribution tax to govt before giving the dividends to its shareholders. Hence, anyways we are getting slightly less share of profits in our hand anyways.

Update : Now after budget 2018, the dividends from equity shares or mutual funds will be taxed at a flat rate of 10% above the threshhold limit of Rs 1,00,000 in a financial year. Before budget 2018, the profits from equity after an year was 100% tax free.

10. Amount received by way of gift on marriage

Any amount you get as gift on your marriage is tax free. So your friends, relatives or any random person can gift you any amount or something valuable as a gift on your marriage, and it will be non-taxable for you. Just make sure that the timing is matched with your marriage and the gift date.

It should not happen that you get some gift after 2 yrs of marriage and you try to justify that it was a gift for your marriage.

Its like this, If you are getting a gift of Rs 10 lacs from a friend (which is nearly impossible), ask them to hold on for a while and gift it to you after few months or a year when your wedding is in place and you will save a lot of taxation issues 🙂

11. Any amount received through WILL or Inheritance

There is no inheritance tax in India now. So any-thing you get in inheritance through WILL is not taxable in your hands. It becomes your property and now when you invest that money, only the interest part earned on that property will be taxed.

And Many more

Note that, it’s not possible to list down each and every income which is tax-free. Here I have listed 10 income’s which I think most of the investors should be aware about this. There are many other things which are not taxable, but it applies to certain section of investors.

Are you aware about some income which is tax-free and not mentioned here?

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263 replies on this article “11 tax-free income in India – every investor should know”

  1. Hari says:

    Very helpful article on tax free income. I am ware of tax implications of equity mutual funds. Investing more than 2 Lacs per year in Mutual Funds demands declaration in Tax Return. I do not see this declaration column in electronic filling of ITRs/e-ITR forms . Can you share your experience as Frequent transactions/switches among Funds may cross this limit of 2Lac. Thanks

    1. Hi Hari

      This query belongs to CA domain, hence we are not the right people to comment on this issue.

      I suggest you get in touch with a CA for this in your city.

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/pro

      Manish

  2. Hitesh says:

    Very Nice list of tax free incomes. I thinks everyone should invest in mutual funds, it will not only provide 12% return but also provide tax benefits

    1. Thanks for your comment Hitesh

    2. Jagoinvestor Admin says:

      Hi Hitesh

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also

      Manish

  3. Madhu says:

    Surprised to see point 9. From what i read, DDT is only applicable on Debt Mutual Funds. Been a great admirer of your views and knowledge as well as clear and simple style of explanations. Hence a bit surprised. Could you pleae clarify? Is this an old article which has not been updated?

  4. ajayv says:

    hi… i am a musician and i am getting a large sum of money for a project that i did overseas. can you let me know how this income will be taxed and what are the ways in which i can legally reduce my tax.

    1. Hi ajayv

      This query belongs to CA domain, hence we are not the right people to comment on this issue.

      I suggest you get in touch with a CA for this in your city.

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/solutions/ca-services

      Manish

  5. TPoddar says:

    I would appreciate your advice with regard to income tax in the following situation:

    My maternal grandmother transferred shares of a company she owned to my father from her demat account to my father’s demat a/c in 2005. The value of the shares at that time was about Rs 2000 to Rs 2500.

    It was not possible to open a trading account in her name because of her advanced age and infirmity. Also the brokerage house we approached said that the cost of opening a trading account would be more than the value of the shares and that a better solution would be to get it transferred to someone else’s demat a/c. Accordingly the same was done.

    Subsequently she died in 2007 after prolonged illness. No formal gift deed could be done after the transfer of the shares as she took ill after a fall and never completely recovered.

    We find that the value of the shares has appreciated greatly and is close to about 90000 now.

    Would there be any taxation issues if we dispose of the shares now.

    1. Hi TPoddar

      This query belongs to CA domain, hence we are not the right people to comment on this issue.

      I suggest you get in touch with a CA for this in your city.

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/solutions/ca-services

      Manish

      1. Radhakrishna Edhara says:

        Hi TPoddar
        As per my information, no tax required to pay by you.
        As you are keeping the shares more than one year it comes under long term capital gain and tax for long term gain is deducted at brokerage firm.

  6. Kalpesh says:

    If I received employee stock of a US based MNC and shares are withheld for the tax portion , can I get a credit or refund as I am indian employee?

    1. I dont think so, its just that you are paying the tax one time in US instead of India

  7. SANJAYLAHA says:

    What is tax implication on profit on selling of gold etf. How the expenses like brokerage, stamp duty etc. are taken into account?

    1. These are not applicable in gold ETF

      1. SANJAY says:

        Dear Manish thanx for a reply. But I have not got my answer. Pl tell me about tax implication.

  8. Partha says:

    Hi Manish,

    What about SIP encashment amount? Is it Taxable?

    Regards,
    Partha

    1. Not after 1 yr incase of equity mutual funds

  9. spguptahyd says:

    I am a senior pensioner. I have a FD maturing in Aug 2016. I dont want to renew it in view of IT point of view and falling Interest rates. Also i may go to 20% slab. It was suggested to invest in Bond funds. Which are those? BSL
    dynamic Bond fund/ICICI pru long term fund/Bond fund? Please advise.

    1. You can choose bond funds , they are secure enough. If you want, our team can help you setup things and invest in this fund

      Just fill up this form – https://www.jagoinvestor.com/solutions/invest-in-mutual-funds

  10. Akshaykumar says:

    Hi,
    Suppose I am working in Ivory Coast (African Country) from an Indian Employer. At the time of interview, they have told me that you will get tax free salary in Indian Account which will be deposited by Indian Employer in my Indian Bank Account.

    Will this salary is taxable? and one thing I want to know that what is Tax Haven and which country is Tax Haven for India?

    1. Yes it will be taxable in india.

  11. ARPANKUMARCHOWDHURY says:

    THANKS…

  12. Ganesh says:

    You have forgotten the star of tax free income i.e. PPF interest .

    1. Thanks for your comment Ganesh

  13. rajivranjan says:

    I have read your one book….How to be your own financial planner… ….. and am reading 16 Personal Finance Principles every……….

    There is nothing about NPS…..
    In this article you may include food coupon upto 5000/- as tax free .

    1. rajivranjan says:

      Books were very informative. Thanks.

    2. Sure, will think about it 🙂

  14. Krishan says:

    I am an IT professional and working in company and also working on forein jobs as free lancing and receiving income. I want to know tax implications on income from jobs.

    1. It will be taxed as per slab ! ..

  15. Rahul says:

    Thanks for this Article 🙂

  16. Swapnil says:

    Hello Manish,

    Can you please advise is this a good option——- I am wondering rather than going for big sum assured in term plan , i prefer 30L S.A from Aegon i return for 10 years, if i survived the tenure i will get back the premium( 30L because i have a Home loan of same amount –For mitigating loan risk) plus another term plan of preferably 70L from insurer with good Claim settlement ratio like Pridential/LIC/HDFC for family backup.

    1. In pure term plan , there wont be return of the amount !

  17. KoushikDas says:

    Dear Sir, in point three in the article, though Share of profit appears to be tax-free but it can not be classified as tax-free because the tax is already paid @ 30% by the partnership firm. Therefore, if partner’s income falls in lower tax bracket(for example 0%, 10%, and 20%) he is eventually paying more tax (i.e 30%) because this income is taxable in the hand of Partnership firm.
    Therefore, this relief do not fetch any benefit to assessee except the fact that it is made to avoid double taxation.

    1. I didnt understand what you are trying to say ? Please give example !

      1. KoushikDas says:

        Sir, What I wanted to mean is this is not actually tax free, the profit is not made taxable in the hand of the taxpayer is just to avoid double taxation. Thank You

        1. Thanks for your comment KoushikDas

  18. Arvind says:

    Refresh these old articles

  19. CRao says:

    I invested in ULIP in 2006, paid premium of 60000 pa for 5 years and remain vested. It reaches maturity in near future (completion of 10 y from start of policy). I claimed tax exemption under 80c for a couple of years but not in the last 2-3 years of premium payment. Current value of fund is about 5 lacs, with Death Rider of Rs 3 lacs. I have option to withdraw 100% on maturity or 50% redemption with remaining 50% structured quarterly payment over optional number of years, or 1 of several annuity options. I do not want to take annuity. As a retired person, I may fall in 10% tax bracket (excluding redemption of this ULIP). I would like to know tax implications of 1st 2 vesting options.

    1. I suggest withdraw full amount . There should not be any tax as after lockin period of 5 yrs, there is no tax obligation !

      1. Rao says:

        Thank you!

  20. prasad says:

    hi we got 50 lak from us company thare is any tax in india ?????????????

    1. Hi prasad

      This query belongs to CA domain, hence we are not the right people to comment on this issue.

      I suggest you get in touch with a CA for this in your city.

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/solutions/ca-services

      Manish

    2. KoushikDas says:

      Yes, If you have received this amount in the form of the dividend from the foreign company the said amount will be taxable in the hands of the assessee at the rate of 20%, charging section: 115A IT Act, 1961

  21. Anil says:

    What is an index fund ?

    1. Hi Anil

      Index funds are those mutual funds which invests in all the stocks which are part of index in same proportion !

      Manish

  22. samar says:

    How to claim tax returns on telephone Bsnl landline bills?under what tax article?

    1. Who told you that you can claim it ?

  23. Dhaval says:

    after marriage if I would like to add my name as my wife husband on Pan card is it Possible Please let me know how to add my name without change her father Name and Pan No, also i can use this pancard in all department when this required for both name account of my wife

    1. Hi Dhaval

      Thanks for asking your question. However, I dont think I am eligible to answer your query as its either out of scope of my knowledge or its not related to money matter directly

      Manish

  24. raj says:

    Manish

    If my brother, who is a farmer ( and has only agricultural income) gifts me one time, Rs.5 lakh, via a gift deed, then is he is liable to pay tax on that 5 lakhs ( I understand that as a donee, I am not liable). I have heard some people say that farmers or those with agricultural income wont be subject to tax if they happen to be the donor.

    Eagerly awaiting your reply

    Raj

    1. Agricultural income is any ways not taxable ! , So he does not have to pay taxes in anycase!

  25. Romeo says:

    Thanks… for the info

  26. Patricia says:

    Hi,
    Can u guide me which is the best way to invest money n get fast money too.

    1. Not sure of your exact requirement

  27. Anirudh says:

    Thanks for the Info Manish ! Didn’t know about the tax savings from the amount received as gift in marriage. If i knew this earlier I could have saved some amount of tax.

  28. santhosh says:

    Agriculture income is also a tax free income

  29. santhosh says:

    Agriculture income also tax free.

  30. ram says:

    Hi Manish,
    I
    This is Ram here.. Thanks for your initiative… I am educated a lot on managing my personal finance
    My question is regarding the extra 50k home loan deduction..will I be eligible after considering my scenario below..

    I do have a question on my home loan. I have recently taken 34 lakhs home loan from HDFC Ltd – Hyderabad .Sanction date is March 3rd… But my loan disbursement amount will be taken on April 1st /2nd and registration to be done on April 3rd or 4th … Is this 50k extra home loan eligibility ..can we avail for next financial years tooo..Pls clarify

    1. Yes, it should be eligible !

  31. Narendra says:

    My friend wife received money from maternal property selling. He invested that money in fds mutual fund liquid fund ppf account. Nearabout 6 lakh. Now she is getting interest on fds. Is it proper way for investment. Is he eligible for tax or she should file return. Again she may get more money from another transaction.

    1. With interest on 6 lacs, I dont there its enough , so she does not have to pay any tax

  32. My friends fathein law expired two years ago.he left behind wife two married daughter and one unmarried daughter. After his death they sell their plot and agricultural land. They got money on crores. Now their mother purchased two plots. And now constructing new house on one plot. There is more transaction in bank for all of them. Is it necessary to file return of all of them. All are housewife.

    1. I think they should consult a CA on this. A return is required only when you earn an income in a year.

  33. Rao says:

    If I lend some money to my wife at no interest and in turn she lends it to a third party, please let me know whether interest earned becomes taxable for my wife or for me.

  34. SIVA says:

    Sir,
    I am a Public sector Executive staying in company provided house. I have No Own house and not availed Housing loan till now. Also I am not getting HRA from my company. Can I get HRA Exemption of Rs 60,000/- as mentioned in this budget. No HRA exemption was claimed till last year.

    1. Yes, you can get it upto 60k

  35. Arvind says:

    Dear Sir,

    I am a 43 years old IT consultant, an OCI living in Europe since 20 years. I am planning to return to india permanently in 2016.

    I have few tax related questions on my current investments.

    I have few properties abroad which fetches me an annual net rent of US$ 50’000, after deducting interest and all expenses.
    I also have few properties in india which are in the form of plots and 2 flats awaiting possession, so no rental income.
    I have few FDRs which currently generates a tax free income of Rs. 30 lacs per annum.

    I know for 2 years after returning back to India, I will have RNOR status under which I will be considered an NRI for tax purposes, it could be 3 years depending on which month I come to india. I don’t plan to work in India but rather would look for acquiring a company or start a new startup.

    Here are my questions :

    1) Will I have to pay taxes on capital gains on property sold abroad even if the property was acquired 15 years before ?
    2) Will I have to pay taxes on yearly rental income (US$ 50’000)even if I have paid taxes abroad on that income ?

    After 2 years, when I lose my RNOR status is there a way to save taxes on income mentioned above apart from the following
    80CCC Max amount Rs. 150000
    80C Max amount Rs. 150’000
    80D Max amount Rs. 25’000

    3) What is the total amount of deductions(cap limit) for House Property Loan( Interest/Principal) ?
    4) Is there a limit of investing in Post office savings schemes where the whole interest amount is tax free ?
    5) I also heard interest generated from 5 year FDRs with PSU banks will not be accounted for Tax when it gets matured?
    6) Is there a limit of investment in Tax saving mutual funds ? BTW, Is there a difference between normal MF and tax saving MF ?
    7) Is there a limit of investing in ELSS for NRIs
    8) Investment in stocks for NRIs residents have the same rules as far as taxes are concerned ?

    Is there any other means where I can invest to reduce my taxes to minimal. I won’t need much money during next 10 years but would need it for kids higher education later. The idea is to grow my corpus without taking any divident during these 10 years.

    If you can kindly help me in my financial planning it would be great.

    Many thanks,
    Best regards,
    Arvind

    1. Hi Arvind

      A CA is more qualified to answer you query, hence I suggest better get in touch one.

      We are not right people to talk on this

      Manish

  36. Sushma says:

    Hi Manish,

    I am a govt employee and my date of joining is Nov 2014. I got my salary with arrears in May 2015.
    Below is my salary details

    FYear Gross Deductions Net Pay
    —— ————- ———
    2014-15 166304 17239 149065
    2015-16 324150 51973 272177

    Total 490454 69212 421242

    Do I need to do tax saving since I got complete salary in this financial year or else not required since arrears is for previous year salary. I am confused.

    Please suggest.

    1. No, you dont need to do any tax saving

  37. Hiten says:

    Dear Manish,

    Thank you very much for such simple and informative website. I really appreciate the effort.
    God bless you and keep posting.
    Thanks again.
    Hiten
    mehta.hiten@gmail.com

    1. Glad to know that Hiten ..

  38. Mani says:

    Hi Manish,

    I had sought advice from one of the leading tax consultant companies on how/where to invest to help me save taxes.
    I had also shared my latest salary slip, IT computation sheet,LIC receipt and also my rent receipts (Bangalore) with them so as to have an all-round information.
    They had viewed the same and had responded back to me with the following suggestions:

    1. Take Supplementary allowance as reimbursement.
    2. Take home loan and save your tax liability.
    3. Take car lease from your company and avail the benefits of installment paid from the company.
    4. Invest in NPS to save your tax liability.
    5. Also take Mediclaim policy.
    6. Also you can invest in 80CCG i.e Rajiv Ghandhi Saving Scheme and avail benefits for tax saving
    7. Also take rent receipts of an amount of Rs.14500 per month and save your tax liability.
    8. Only 5yrs FD’s is eligible for tax savings its better to invested either in 5 years or some other investment.

    I have my own doubts/questions related to the above suggestions (pointwise questions as mentioned below).

    1. In my job grade, I will be eligible only for medical reimbursement as supplementary allowance & leave travel allowance (LTA). I cannot opt for LTA as I will not be in a position to submit the train tickets and take leaves for continuous 10 days at a single stretch. So the only option left with me is medical reimbursement which I am currently taking as monthly taxable. I am getting 1250 per month (1250*12=150000) credited and the same reflects in my salary slip and hence not sure of the difference it makes when the change is made from monthly taxable to reimbursement. Also note that my company does not provide any food/meal coupon for any supplementary allowance.
    2. I am not planning to take a home loan as this is not suited for my requirement.
    3. My job grade does not permit me to take car lease or car loan from the company.
    4. Please let me know whether investing in NPS is a good option. If yes, let me know any recommended NPS names associated with this scheme.
    5. Currently myself,spouse and kid are covered under my company medical insurance coverage which is quite good. If still this needs to be considered, let me know any recommended mediclaim policy. As my parents have their own medical insurance(Ex Army insurance coverage), they do not need one as of now.
    6. Please let me know whether Rajiv Ghandhi Saving Scheme is a good scheme for tax saving. If yes, how much amount needs to be deposited.
    7. I am paying a rent of 12000 INR (currently) and while declaring the same on my company payroll procedure, I need to declare the PAN number of my owner. So is changing the rent amount to Rs 14500 per month be a cause of concern to my owner.
    8. I have knowledge and had invested in 5 year FDs for tax savings. Any suggestions on much more attractive schemes for this place. I have heard a lot on ELSS but not sure on the fund names and the real benefits comparing to 5 year FDs when it comes to tax savings.

    Over and above all the questions, I have heard that the max amount we can show for tax savings is 1,50,000 no matter whatever the salary is credited. Does it include all the sections or is it that only for 80C. If so what about the caps for other sections like 80CC, 80 CG and all.

    A detailed answer to above will be of great help. Thanks.

    1. hahah says:

      hahahah

  39. YOGESH says:

    Hi Manish,

    I have small query, i.e, I worked 9.3 years in one company, Now i will relieved on 14/01/2016 and will join new company on 20/01/2016.

    Is it Legal that i can withdraw my all PF and EPF with current UAN number and can use same UAN for new company?

    Note : I want to Withdraw the all PF.

    1. YOGESH says:

      Sorry its not EPF its Pension !

    2. If you are unemployed , then you can withdraw it

      1. YOGESH says:

        Hi Manish Ji,

        I will join new company in same month. can i withdraw the PF ?

          1. YOGESH says:

            Ok. Thanks for the information

            Regards,

            Yogesh Ulhalkar

  40. Rajesh Lakhani says:

    Hi Manish,

    We are looking for Financial Advisor who can review our portfolio and suggest areas where we can improve savings and reduce tax.

    Thanks.

    Regards…Rajesh

  41. channabasu says:

    jagoinvestor calculator on Tax shows wrong calculation even if some investment made under 80c deduction 10% tax bracket) why?

    1. Can you give me link ?

  42. Vinod says:

    Dear Manish Ji,
    I am seving max 1.5 lakh under 80c. How to save additional income tax and whether Pre -EMI of an apartment under construction loan can be claimed under tax saving.

    1. No , it cant be claimed . I think above 80C its going to be tough to claim more other than home loan interest part

    2. vinod says:

      Thanks

  43. anwar says:

    Where to invest one crore f.d.’s money for long term wealth creation?

    1. Hi anwar

      I would suggest mutual funds. Do let us know if you need our help in picking up the right funds for you and also give you access to a portfolio software ! Do fill up the form here – https://www.jagoinvestor.com/services/financial-planning

  44. Anoop says:

    I am sending 8000/-pm to my parents can i get rebat in tax.

  45. Sudhir says:

    Hi. I am a 50 year old male with an fd of 75 lakhs. Expect my lic annuity to start at 56 of age of about 25 k. Can increase my fd s in another 10 yrs till i retire by atleast 6 lak per year. Apart from this have sip s going for 25 k pm. Please let me know if i will have enough corpus in 10 years when i retire. Pls note most of the fd money in NRE deposits. Many thanks

    1. If it continues to be in FD, it might not earn enough returns .. Why dont you try out some balanced options like Balanced Funds or debt oriented funds ?

      Manish

  46. Thomas says:

    HI Manish,

    I am going to retire by next year will be getting around 50lakh post retirement can you suggest some good tax saving
    scheme to park my retirement money

    1. You might want to look at mutual funds and generating dividend income from mutual funds

      We can help you plan your retirement corpus in a way that its safe and provide a regular income. You can look at our service on that – https://www.jagoinvestor.com/services/financial-planning

  47. Anil says:

    I have retired from the Indian Navy and am looking for a tax saving measure. ICICI Bank is doing some hard core selling for their Elite Ulip.I wonder why. ? What is the catch?Please advise me some tax saving measures for my lifetime savings.

    1. Because the ULIP helps the company more than customer 🙂 . You can look at PPF or ELSS mutual funds for tax saving

  48. Imon says:

    Hi Manish,

    If I withdraw my Epf after 7 years of continuous service, do I need to pay tax on the interest earned for the entire period or only for the last 5 years?

    A nice article BTW.

    -Imon

    1. You dont pay any interest 🙂 . After 5 yrs, its fully tax free

  49. LekhaB says:

    Thanks for creating an educative and simple to understand site for retail investors

    1. Glad to know that LekhaB ..

  50. Sahil says:

    My dad has one ICICI pru pension policy, the company says, its 6 yrs old policy, the company says if u withdraw funds from that, you need to pay capital gain tax. but if u with draw and invest again in some other policy you need not pay any tax. is that true or he is just fooling.

    1. I think he is right . Capital gains can be saved , if reinvested the same money , It happens in real estate also .

    2. Krishna Rath says:

      Surrendering before maturity has the tax implications. First of all, the premiums that you have claimed as part of deduction under section 80C will be reversed and you will have to pay tax on it. Secondly, the entire surrender value will be added to your income and you will have to pay tax on it according to your tax slab.

  51. balu says:

    Hi sir can I invest 1.5 lakh in EPF and 1.5 lakh in ppf in one financial year. I know that under 80c I can exempt up to 1.5 lakh only, but I’m planing for better retirement.

    1. Yes you can invest 1.5 lacs in each

  52. Aditya says:

    Humble request to Subscribe me to your newsletters

    1. Done , You must have got a welcome email

  53. Nag says:

    Hi, Your 1st point states that we are not required to add up the interests from all the savings bank accounts and then deduct Rs.10,000 from it. Is it that the only interest we need to add is which ever is more than Rs.10,000 ?. Please clarify , thanks.

    1. No , we actually have to add up all the saving bank interest and then if its lower than 10k , then no need to pay tax, if its more than 10k, then you have to include the additional part in your income and pay tax

  54. GSS says:

    Where to declare the tax free income earned from EPF, gratuity and superannuation in IT return? Which return form to fill for that?

    1. Hi GSS

      A CA is more qualified to answer you query, hence I suggest better get in touch one.

      We are not right people to talk on this

      Manish

  55. Rohit says:

    Hello Manish,

    Can you please suggest where should a 60 years old retired person invest his retirement money?

    1. cbrao says:

      I am no expert, but going by Manish’s articles, following may be suitable for you :
      Partly in LIC Varista Pension Yojana – for best returns, tomorrow (14 Aug 15) is last date!
      Bank FDs with returns upto 3 lacs p.a. after tax exemptions.
      MF with dividend payments, which are tax-free returns.
      Equity MFs

      Some single premium LIC policies exposed to equity can also give good tax-free returns.

    2. It can be a mix of things like

      FD
      MIP
      Mutual funds with dividend option

  56. surbhi says:

    Hi, I have recently changed my job. In my previous organization i could not serve 3 months notice period and hence my employer is deduction2 months basic salary from me. My New employer agreed to buyout that 2 months salary deduction that i have from my old employer. Now my question is whether this amount will be taxable in this year’s income? Technically i donot earn anything on this. its given to me against what i paid

    1. Yes, if its paid to you , then its considered as your income itself

  57. Dipak says:

    I have invested in few SIP Plans with Growth option 5 years ago but i don’t have details about it. Sir how can i claim my Money back?
    Please help me!

    1. Hi Dipak

      You can leave your detail here https://www.camsonline.com/InvestorServices/COL_ISMailBackServices.aspx and you will get a PDF with the details of your mutual funds . After that you can go to each mutual funds company office and fill up the withdrawal form

      Manish

  58. Ravi says:

    Hi Manish Chauhan..

    My redemption form is rejected due to not updation of my PAN number.
    I called Mutual Fund care and updated PAN, Mobile as well as Mail Id also.

    Now I want to redemption my mutual fund through online,
    So , Could you give the guidelines how to do online redemption , what are the things I need to do..

    Thanks & Regards,
    P. Ravi kUmar.

    1. You need to have an online account first with the AMC to redeem the units. Enquire with AMC itself as they will be able to guide you on that

  59. Ravi says:

    Hi..
    I gave redemption form of my SBImagnum equity fund mutual fund on 20th of this month..
    But Still I didn’t get any message regarding my redemption and not deposited in my account.

    I want to know the reason..
    And also i want to know when money will be credited in my account.

    Thanks & Regards,
    Ravi

    1. Hi Ravi

      better check with the AMC Here !

  60. Sreedhar says:

    Hi Sir,

    I am new to this and would like to know if I wanted to run a chit group within my friends group.

    Whts the best advice and suggestion if I want to use current account for all the chit related transactions?

    Example : Monthly payments from members, Deposits, return winning amount to bid winners, etc ….

    All in all …… all transactions related to this small household business.

    If at all I have to pay tax – for a 1 lakh chit , 20 members, 20 months I will be benefited around 50k-1lakh.

    So finally do I have to show my income as 1lakh or the total sum deposited upto 20 months i.e nearly 20lakhs.

    Please advise……

    1. Hi Sreedhar

      A CA is more qualified to answer you query, hence I suggest better get in touch one.

      We are not right people to talk on this

      Manish

  61. spguptahyd says:

    Cash payed towards ‘Preventive check up’ upto Rs5000/ is eligible to include in IT exemption under sec 80D.. Do i have to collect receipt and preserve.

    1. Yes, its better to keep it with you !

  62. RONALD says:

    If I take 5 Lacs interest free from a friend as a loan to invest, what is the maximum tenure I can hold it before returning it?

    1. There is no rule regarding it. Its always between you and your friend !

      1. Ronald says:

        Thanks mate. Great work on the site. Thanks again.

  63. Naresh says:

    Manish ,
    browsed your website ; found it very informative & useful. Keep up the good work.
    How can you help a senior citizen like me as regards personal finance

    1. What is the issue you are facing in personal finance ?

    2. Naresh Bantwal says:

      Thanks for the prompt response. I am 63 yrs pensioner & my wife 58 yrs. we have a group mediclaim floater from Bank of India for 5L we would like to have additional cover of 5 L. Pl. suggest suitable cover

      1. Hi Naresh Bantwal

        Thanks for sharing your health insurance requirement. I think the best think you can do is leave your details at https://www.coverfox.com/jagoinvestor . And you will get a expert assistance on selecting and buying the right policy for you.

        You can then take the decision.

        Manish

  64. Vikrant says:

    Gift given by an NRI to his/her spouse, parents, children is tax free.

  65. Kishor.R.Rokadiya says:

    I want to know 100% guarantee of pricipalamount & return should be monthly and principal amount growth also. Please give name of investment where I have invest

  66. VB says:

    Manish, I just started reading your articles.. They are informative, simple to understand and very relevant. You are doing a great service to people. God bless you. Please keep it up.

  67. PFquery says:

    Is super annuation ang gratuity tax free if availed of
    A. At retirement
    B. Prior to retirement age, if retiring early

    Thanks!

      1. PFquery says:

        Tks Manish! To clarify, If one retires prior to retirement age, then superannuation and gratuity payout IS taxable?

  68. Ritesh says:

    I wanted to know if increase in transport allowance from Rs.800 to Rs.1600 pm and medical expenses has been effective in the payslips, because mine last month pay slip still shows the old allowances only ?

    1. Talk to your employer in that case !

      1. Ritesh says:

        So it has been effective ?

  69. Mohana says:

    Thanks for sharing this Manish. I was unaware of lot of these things.

    Regards,
    Mohana

    1. Welcome .. Glad to know that Mohana ..

  70. Nikhil says:

    Just a small correction:
    Should it be ‘Maturity or Claim amount received FROM Life Insurance Compan’ instead of ‘Maturity or Claim amount received BY Life Insurance Compan’?

  71. Thank you sir ji.Nice post as expected from you.I think in India so many people are not much educated about taxation.But it is an important factor for saving income tax.I like to grow knowledge about tax.

    1. Thanks for your comment Srikanta Kundu

  72. Satya says:

    Are returns from ELSS 100% tax free?I mean , suppose one invests in SIPs in ELSS.Are the income on investments made even in the last month of 3 year lock in period also tax free?
    And what happens if one chooses to continue the ELSS after the end of 3 years?

    1. No Satya

      Each SIP payment should be looked separately. Any profit after 1 yr is tax free in case of equity (elss or non-elss)

      1. DCGupta says:

        I think, in case of ELSS, if the person has taken tax advantage on investment then, the lockin period has to be 3 years for profits to be tax free for each SIP.

  73. Chandrashekar Iyer says:

    Hi Manish,

    I got certain queries regarding the Tax Implementation and on return prospect on NRE TD’s.
    I’m considering the investor from USA.
    Tax:
    Even though we don’t deduct tax at source in India, but the investor is liable to pay taxes in their country of Domincile especially in USA, which actually increases their Tax liability over there, as the taxes are quite high USA.
    Returns:
    If a person don’t want to retain funds in India and will be taking back the investment, then also i believe it will be an loss making proposition for him with increase in conversion rate of USD against INR. e.g:
    If Mr. A has invested in NRE FD through remitting Dollar 10K on 1st April 2014 in INR 5,98,400/- @ 9% P.A for one year if the client repatriates the maturity to USA on 01st April 2015 his value will be INR 6,12,238/- and in terms of USD 9854.14 @ 62.13, technically the investor looses USD 145.46 in his principle.

    Other instrument which one can look forward to invest to earn tax free returns:
    1) PPF – Tax Free Investment & Returns, (Only for residents)
    2) ULIP : Tax Free Investment & Returns

    Regards

    1. Hi Chandrashekar Iyer

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them

      Manish

      1. DrRajan says:

        Dear Sir,
        As for taxability in USA for the income earned in India, we have no jurisdiction – try if there is any provision of DTAA;
        As for the risk of losing in the NRE FD eg you have given, you can avoid the same by investing in FCNR – you get interest in USD itself and principal is not eroded.
        As Manish said, NRI taxation in INdia and USA is complicated. Better to talk with specifics with specialists.

  74. Atit says:

    Hi Manish,

    I want to add one more source of tax-free income. Interest earned on Tax-free bonds are also tax-free.
    Reason to share this because in next 1-2 months, there will be tax-free bonds issues coming from NHAI/IRFC 🙂

    Thanks for sharing the info.

    1. yogesh says:

      Hi Atit,

      how much will be interest rate on that? is it applicable t NRE’s?

    2. Thanks for sharing that !

  75. Srinivas says:

    There are some points that can make the article more clear.

    One is answerable for the amount in his bank accounts and his properties. Hence, if one can handle gifts etc through cash or someone else’s account, there will be no issue.

    The responsibility of tax payment is on the person. One has to calculate the total tax on income and pay tax accordingly. TDS by banks cuts rates at base rates. If a person has more income, one has to properly compute and pay. Now a days, with PAN being key to all bank accounts, it is not difficult for IT dept to find out if one declared all income or not. Hence, it is wise not to avoid tax but manage it correctly.

    Interest in savings account : only the interest on the money kept idle in savings account comes under this category. Interest of FD/Sweep etc doesn’t belong to this category.

    All the income that flows into one’s account is to be explainable. If it is taxed income like salary, there will be no issue. But if it is other income like a gift or inheritance, it requires a documentary support and the same needs to be declared under appropriate section in tax return. Please note that there is a section in income tax return where one can declare incomes which does not come under tax. Gifts/Inheritances can be declared there.

    Thus it is wise to keep a back up for all in entries of all bank accounts and show them in income tax return as appropriate.

    1. Hi Srinivas

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also

      Manish

  76. sri says:

    Hi manish, money received as inheritance. Is not taxable. But is it not to be declared and down as income in tax returns? Like savings bank interest which is declared and then exemption is claimed. If so, under what section is inheritance exempted? Would be grateful if you are able to answer. I haven’t been able to figure this out.

    1. Hi sri

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them

      Manish

  77. Raj says:

    Hi Manish, Thank you informative details. What about share options given by Company to his employee? I mean if Company allotted share before three years and employee sold out share now and gain than in that case income should taxable or not?

    1. If its listed on stock exchange and STT was paid, then no tax . Else the taxable will come into picture !

  78. renukacharya says:

    Whether money received by retirement benefits are taxable income?

    1. renukacharya says:

      When a govt.servant retires from service he will get retirement benefits like DCRG, leave encashment,etc which may amount to more than 20_25 lakhs. Whether the amount so received is taxable income?

    2. Depends from where you are getting it .

      PPF , EPF – Tax free

      NPS – Taxable

      1. Dr Rajan says:

        Dear Sir,

        Gratuity is exempt upto certain limit; leave encashment also upto some limit; PPF, EPF, LIC maturity amounts, are all taxfree; Commutation of pension (being a Govt. staff), is taxfree. Thereafter monthly.

  79. sandeep says:

    Should one mention the gift recieved during marriage , while filing income tax returns in the same year ?…

    I mean if one keeps an fd say of 5 lacs recieved during marriage from all sources , should one mention in the next assessment of tax filing or just dont mention it and keep quiet

    1. You have to mention that its a gift ! ..

    2. sandeep says:

      WHAT TO DO IF ITS NOT BEEN DISCLOSED . MARRIED 5 YRS AGO . DIDNT KNOW THE TAXATION RULES THEN

      1. Hope for the best. If any query comes (which is unlikely) you will have to pay the tax with penality !

  80. Milan Jawani says:

    Hi Manish,

    If I made loss i.e. 1 lakh after invested in equity (Invested & sold within a year) does it minus from my annual salary and accordingly reduce the income tax for the year ?

    1. No , only you can set it off from the profits made on shares/mutual funds. like say if you made profit of 2 lacs in shares. and 1 lacs loss also , so your total profits will be considered as 1 lac

  81. lokeshwar says:

    Thanks Manish for this topic it is really helpfuull

  82. Pradeep says:

    How is income from Intra day stock trading taxed ( Buy today-Sell today)? Is the difference between total sell value and total buy value for particular share traded intraday (one day) considered as Business Income? If yes what will be tax rate?

    Is tax audit required for income generated through intra day trading ? If yes is there any limit for turover? If yes , which turnover is considered — overall sell value of all shares traded during a year or total of difference between total sell value and total buy value for all shares traded on intraday basis in one year?

    Have you published any article for taxation of income generated through Intra dat stock trading

    Thanks in advance for reply

    Pradeep

    1. It will be sell rate – buy rate and it will be taxed at 15% rate

      I dont think any audit is required for an individual trader

      Manish

  83. kshitij says:

    hi manish,

    i think your opinion on tax related to NRE accounts is not correct as I(who has a NRE account ) have verified by many CA and they all say that interest part is taxable

    1. Hi kshitij

      But when I see the bank pages like https://pnbindia.in/new/Upload/En/FAQs%20NRE.pdf and https://www.hdfcbank.com/nri_banking/accounts/fixed_deposits/fixed_deposits.htm . They all mention that its tax exempt . On what basis your CA has told you that its taxable ? I mean there might be some especial case where its taxable ?

      1. Dr Rajan says:

        Dear Manish & Kshitij

        Interest from NRE a/c is tax free in India. For the NRI, say in US, it may attract tax in US, but is also subject to DTAA provisions. Interest earned on NRO a/c is taxable in India also. I am sure of this.

  84. Sanket says:

    Hi Manish,

    How can a person with non-traditional income file tax return? Example, a housewife who have FDs on her name and as guardian of her children, rental income from – all summing up to
    a) less than 2 lac
    b) more than 2 lac

    1. What do you mean by “how can a person file ta return ” ? You can always reach a CA who can do it for you. However as you said if the income is less than 2.5 lacs (thats the new limit) , the filing is not required. Any amount above 2.5 lacs (we are talking about taxable income) . then tax has to be paid

      Manish

  85. HARESH says:

    sir,

    if i invest 1000/- monthly sip in mutual fund . and after one year i have get 15000/- it means 3000/- profit. my question is that this 3000/- is tax free or first sip profit is tax free. because profit of last sip is also including in this 3000/- which is invest last month.

    1. Each investment is different. So only those units which were bought before 12 months will give tax free profits !

      1. HARESH says:

        it means if first sip is rs. 1000/- goes to 1100/- after 12 months and withdraw full amt. and profit on total investment is 3000/- (investment is 12000/-) than tax pay on 2900/-?? it is correct?

        1. Not getting your example . THe point is each investment of per month is taken seperately. When you sell anytime, make sure you are selling the units which were bought before 12 months

          Manish

  86. Nitin Nahar says:

    Very useful information Manish. Thanx.

    Would like to know that if I receive any amount (say 10 lacs) from my in-laws as gift after 10 years of my marriage & I use this money to repay my home loan, what are the tax implications.

    Rgds, Nitin Nahar

    1. Tax from in-laws will not attract tax for you .. so its totally ok !

  87. V. Subramanian says:

    Dear Mr. Manish,

    LTA is not tax free every year. It is tax free only for 2 years in a block of 4 years. Further it is only the actual amount spent only on travel (not on accommodation, food, etc.) . Even in travel other rules are applicable like it is only for shortest route, etc.

    1. Thanks for correction

  88. Ankush says:

    Hi,

    What is I make a switch from one Equity Fund to another Debt fund of the same AMC within a year and later withdrawn after 1 year combined.

    Rgds,
    AB

    1. No , in that case, you will have to pay the tax

  89. nitesh patel says:

    I have 4 saving accounts in different banks do total interest of 40000 is taxfree or not & i have taxfree bond so weather interest is tax free or not

    1. Nitesh

      Only a total of Rs 10,000 is tax free

  90. Ganesan says:

    Thanks. I am of the opinion that the interest earned in NRE account is tax free. You also confirmed it. Should we file IT return in India for the interest earned in NRE account? Pl elaborate on the comments of Shri. Vimalraj Nagendran.

    1. Yes, you have to do it

      1. Ganesan says:

        Thanks.

        1. Vimalraj Nagendran says:

          If you are living in US and you are considered a resident for tax purposes then you have to file tax in US and pay tax for the interest. You can get away in the short term by not disclosing but thats considered tax evasion. With world converging by computers and everything being tied to Aadhaar/PAN number in India & SSN/ITIN in US it is only matter of time someone runs a consolidation report and your name pops up saying you earned interest in India and didnt report/pay tax in US. Check out how much that will cost you when that happens.. Its called Tax Audit 🙂

  91. venkat says:

    Dear Manish,
    Nre deposits mature after the nri has returned to India for good.How are that fds treated

    Thanks
    Venkat

    1. I am not 100% clear on that

      1. Vimalraj Nagendran says:

        The deposit matured/mutual funds/stocks sold after returning to India is tricky. It depends on when you returned and how the tax needs to be filed. Many factors involve such as when you return to India determines your residency status on both countries for tax purposes (resident, non-resident etc) and when your deposit matures (in case of US, if deposit matures before Dec 31st or after). On top of that all these rules differ for each country.

        Best will be work with a CA/auditor to file taxes for that year.

  92. Vishal Kohli says:

    Great information Manish, as always very enlightening. Thanks!

    1. Welcome .. Glad to know that Vishal Kohli ..

  93. subhash says:

    Is maturity or surrender proceeds from ULIP plan invested in India, taxable for an indian who is currently an NRI of USA ? Does he have to declare it in USA and if yes then what would be the tax tax treatment in USA.?

    1. I am not clear on the USA laws, but in India , still its not taxed because returns from ULIP is tax free

      1. Praveen says:

        Hello Manish

        Last year, my auditor told me to pay tax on profit earned from ULIP Policies and I ended up paying. Is that correct?

        For example, I had a ULIP policy for 20K/year. I continued for 5 years. Total investment was 1 lac. Return on Investment was 1.10 L. My auditor said, I have to pay tax on 10K profit earned.

        From your article, I think, it is tax free. Is there any way to claim it back?

        Please guide,

        Thank you

        Praveen

        1. Praveen

          I am not sure for what reason he said that its taxable. Was your ULIP mainly debit oriented ? Where were the money invested, IN debt option or Equity option ? I dont think claiming it is possible . But it would be a good idea to track why your CA asked for paying tax !

          Manish

  94. Anshuman says:

    Dear sir,
    . As upto 10,000 incurred as interest in fixed deposits. If some one open 3 fd accounts 1lks each, do he liable to pay tax, as in each fd he will get interest less then 10,000 but in total he is getting more then 10,000. Plz clear my doubts.
    thanx
    regards

    1. Any amount in FD is taxable, even if its Rs 1000. What you are talking about is TDS part. Answer is if in one single FD , the Interst is more than 10k , then TDS should be deducted

      Manish

  95. Vimalraj Nagendran says:

    Hi Manish, As for the NRE account, its not entirely accurate. Actually it is not tax-free it is more of Tax not deducted. It is the individual’s responsibility to report the interest income at the country they are residing based on that country’s tax rules, for example as per US tax rules the interest should be added to the income and pay tax as per the tax slab.

    1. Hi Vimalraj

      Do one pay the tax in US even if they are not choosing to take the money back ? I mean if you do not repatriate the money, still you report and pay the tax ?

      1. NKanani says:

        Each country has different rules. In UK, one should consider ‘domicile’ status, i.e., if you are not domiciled in UK, then, if your NRE income is less than £2000, and you do not repatriate to UK, you don’t pay any tax. Otherwise, you need to declare the income and pay tax. The determination of ‘domicile’ status is bit complex , I think. Also, the General Elections may change tax rules in UK. https://www.gov.uk/tax-foreign-income/non-domiciled-residents

        1. Hi NKanani

          Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also

          Manish

      2. Melwyn says:

        The US govt does not know whether the person will eventually repatriate the money back to US or not. In general, the person needs to declare any income earned outside of the US in his US tax returns. Not only that, he has to also declare all financial accounts (like bank accounts, financial accounts etc). See link below
        https://www.irs.gov/Businesses/Income-from-Abroad-is-Taxable

        1. Hi Melwyn

          Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also

          Manish

          1. Vimalraj Nagendran says:

            And this link https://articles.economictimes.indiatimes.com/2012-02-15/news/31060228_1_presence-test-tax-filing-income/3 gives additional details for most type of income coming from India for US NRI.

      3. Ravi says:

        Hi MAnish, We have to include the global income for the year (Calendar year ) while declaring the taxes in US. I am currently living in US with some NRE fixed deposits. I always calculate the interest income received for the calendar year (All my FDs have monthly interest option – I choose it for this purpose only) and convert it to USD according the conversion rate as of the filing date. We also need to declare all the accounts (If we are holding more than 10K USD).

        1. Thanks for sharing that !

  96. Gaurav says:

    excellent information manish

  97. Swaminathan says:

    Very good information. Thank u

  98. Prathap says:

    Hi Manish,

    Thanks for another wonderful article. I have been following Jagoinvestor and learnt a lot. I have read your books too. All good. Thanks for the amazing work.

    Regarding point 4(Maturity or Claim amount received by Life Insurance Company), does the phrase “premium paid” refers to all the premiums paid so far for the policy or the annual premium. Your example considered the annual premium. Kindly explain.

    Thanks
    Prathap

    1. Its Annual premium

  99. aditya says:

    mutual funds are generally not traded on exchange. are you sure you dont get the long term benefit if they are bought/sold directly.

    1. In case of mutual funds, you always get it .

      This “directly” thing is mainly for stocks !

      Manish

  100. Balaji says:

    Leave encashment money that one gets when leaving the company is also not taxable.

    1. Hi Balaji

      Yes, thats one thing which is not taxable. Thanks for adding it

      1. Rehan says:

        I think leave encashed is non-taxable only when you retire. But if you quit in the middle and join another company, that amount is taxable. Manish can confirm it.

        1. I am not aware of any rules like that. I think even if you encash it before retirement . Its still non-taxable

          Manish

            1. Thanks for your comment Rehan

      2. Shashank says:

        Actually there is a limit to leave encashment being tax-free. Leave encashment upto 3lakhs is tax free & the 3 laks is cumulative for all your working life

        1. I didnt knew that .. thanks for sharing !

            1. Thanks for sharing that . will look

  101. vilas says:

    What about interest on saving plus account

    1. Its also tax free upto Rs 10,000 a year

      1. vimal says:

        Saving plus is treated like fd . I m sure about it

        1. If its FD part, then the rule does not apply . The tax free thing is only for the saving bank interst part.

  102. yogesh says:

    hi manish,

    you mention long term equity is tax free after one year so whatever profit earn in first year do we need to pay tax on that?

    1. No , you dont need to . After holding a stock or equity mutual funds for one than one year, when you sell it. NO TAX on that !

      Manish

      1. yogesh says:

        thanks manish

  103. yogesh says:

    How about debt or hybrid mutual funds? Do they come under long term equity benefit or we need to pay tax for them.

    PPF and sukanya scheme are also tax free

    1. Any fund which has more than 65% equity component is considered as EQUITY FUND . hence debt fund will not be treated as equity fund

      1. yogesh says:

        thanks manish

        1. Thanks for your comment yogesh

  104. Manoj says:

    Hi Manish,
    Thanks for the details. Would like to add that Income earned form Agricultural lands is 100% tax free.

    1. Hi Manoj

      Its not that simple when it comes to agricultural income. I read about it online and I got to know that only Rs 5000 is tax free and beyond that if you earn, it gets complicated if you earn non-agri income.

      Manish

      1. Piyu says:

        My uncle is farmer and doing cotton farming. He earn nearly 7 lakh per year, and this income is tax free.

        1. Thanks for sharing that.

        2. Manoj sharma says:

          Yes Piyu
          Your uncle is a Farmer so Ag income is 100% tax Examined.

  105. sudhank31 says:

    Dear Mr Manish , Rs 10,000 interest earned per saving account would be considered or Rs 10,000 limit would be considered for all the saving accounts in total

    1. Total Rs 10,000 by combining all the accounts

  106. Paresh says:

    I think Maturity amount earned from PPF account also 100% tax free.

    1. Yes , thats correct

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